Ukraine Proved Its Drones in Battle. The U.S. Wants Them.
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With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast Business helps turn today's enterprises into engines of modern business. Powering the engine of modern business, powering possibilities. Restrictions apply. Welcome to Tech News Briefing. It's Thursday, March 13th. I'm Shara Tipkin for The Wall Street Journal.

Walmart is battling Amazon with speedy deliveries. It's leveraging its huge store network to get groceries and other items to people the same day they're ordered. Can that help Walmart retain its title as the country's biggest company by revenue? Then we learn about Ukraine's advantages in making drones. And our reporter Heather Somerville explains why the tech is so coveted by the U.S.

But first, we're checking in on a battle brewing in retail. Ten years ago, Walmart's huge store footprint made it look outdated compared to online retailers. Now, it's relying on those locations to compete with Amazon on super-fast deliveries. Here to talk about Walmart's delivery surge is WSJ reporter Sarah Nassauer. Sarah, what's going on with Walmart? Why is it really focusing on delivery right now? Really, it's been...

focused on delivery now for, let's say, a good five years, but it's really been a long road to get there. And really, we're talking about speedy delivery, same-day delivery. And frankly, Amazon really built the consumer expectation that that would even be possible, right? And so, you know, 10 years ago, that's when I started covering Walmart, and they had 4,700 stores in the U.S.,

And that was seen as kind of a negative thing. But little by little, through lots and lots of tests, they've figured out a way to also have same-day delivery that covers more than 90% of the U.S. And that's really the first thing they've done in e-commerce that can truly rival Amazon.

How is Walmart delivering items so quickly? How can they do this same day? They are primarily right now using this system of kind of freelance gig drivers called Spark that they created. Those folks aren't Walmart employees. They're gig drivers, just like a DoorDash driver would be, you know, a freelance driver. That really is what they're using to cover most of the same day deliveries. They also still partner with some of those third party companies like Uber Eats.

How much delivery is it actually doing? They delivered about 5 billion products same day last year, 2024. And they say that's growing fast. And that's of things that you could get in a super center. Groceries, but also clothing or like a throw pillow. And also they're building up a prescription business out of their pharmacies. So are groceries the most popular sort of things that people are having delivered? Or what are they really seeing demand for?

Groceries are the cornerstone. They started really building this business by offering something called online grocery pickup, which is the idea that you could buy groceries online and then pull into the parking lot and they'd put it in your car. And they've sort of layered things on top of that. The ability to also include non-grocery items and then speedy delivery. They've created a network for that. But Walmart's the country's largest grocer and they...

long ago sort of realized, well, that might be a thing that we can use to compete with Amazon. To be clear, Amazon is much bigger online overall. They have a huge head start.

But Walmart has excelled in this same-day delivery of the things that we tend to buy pretty frequently, the groceries and the paper towels. And Amazon is in the process of ramping up that part of their business. They've struggled with grocery. They bought Whole Foods. They've tried Amazon Fresh, which they're kind of redesigning. They had various same-day delivery things that were focused on grocery over the years, some that they've cycled out of.

But certainly they are ramping up a lot of things right now, like just adding more grocery items to more of what they call like their same-day fulfillment centers. And that's in motion now. What does the same-day delivery push mean for the fight over retail dominance? This battle isn't won by Walmart by any means. Amazon is fully aware and doing lots of things to quickly try to cut Walmart off in terms of this sort of...

advanced ability. Walmart's the largest company for revenue in the country. Amazon is close to that. And like if they're on their same growth trajectory, they are going to surpass Walmart this year for a full fiscal year in terms of being the largest company in the country. That was our reporter, Sarah Nassauer. Coming up, Ukraine has an edge on drone development and the U.S. wants to team up.

Can the two find a way to work together on drones? That's after the break.

U.S. defense startups have spent billions to develop small drones for the Pentagon, but it hasn't gone smoothly. And now those companies are partnering with a somewhat unusual source.

Ukrainian drone manufacturers. Here to talk about what's happening is WSJ reporter Heather Somerville. Heather, what does the Pentagon want from new drones? The Pentagon has talked for a long time about the importance of acquiring a very large number of small drones that are relatively cheap, cheaper than the big drones that are accustomed to buying. And

And that can be used in mass. The problem has been the Pentagon hasn't really bought these drones that they say they want. There's a number of reasons for that. Some of that is the Pentagon's fault, but some of that is the fault of American drone makers. They just haven't done a very good job building cheap drones that fly well. Why has it been so hard for American companies to make these sort of drones?

Part of the problem is that there aren't many people who buy American drones. Anyone who's a hobbyist in the U.S. likes to just go out and fly a drone to take pictures is buying a Chinese drone because they're cheap and you can buy them at Best Buy and Walmart and wherever you'd like.

And the Pentagon hasn't bought many of the drones from U.S. companies that are building what they say are military-grade drones. So there isn't much income for these companies. There's no real robust manufacturing capability to build a lot of drones cheaply or quickly in the U.S.

And lastly, we're not at war. So these drones from these U.S. companies haven't been tested in war. They haven't been battle proven. And that was discovered in a rather unfortunate way when a lot of these U.S. companies did send their drones to Ukraine at the start of the expanded Russian invasion and realized that they didn't work at all. How did this partnership with Ukrainian companies come about?

Really, since the start of the war, there's been a lot of interaction between U.S. and Ukrainian drone companies. Over time, there's been a real appreciation and respect for the ingenuity of these Ukrainian startups that have...

created what are now quite enormous drone operations with very limited resources. So what we have now is a smattering of official partnerships, businesses that have been created through a combination of U.S. entrepreneurs and Ukrainian drone manufacturers. And what they're trying to do is leverage all of this Ukrainian know-how that has been developed over more than three years of war

with the software skills that American engineers really excel at. Combining those things together, the hope is we'll start to have some really seriously good drones that the U.S. Defense Department can begin to buy. Where does the manufacturing aspect come into this? You noted the Defense Department estimates the U.S. can build 100,000 drones a year.

Last year, Ukraine built more than 2 million. What's behind the big difference? Yeah, and the 100,000 drones a year for the U.S. drone manufacturing base is optimistic. That's probably everything is perfect.

The U.S. simply does not have the ability to build quickly and in mass. It's just more expensive. Typically, it's hard to find parts that are cheap and readily available that don't come from China. And the Pentagon's not going to buy drones made with parts from China. How does the recent dispute between President Trump and Ukraine's president impact these partnership efforts?

Well, as of now, they don't. As of now, the Defense Department's Defense Innovation Unit really has been in the lead on sourcing Ukrainian drone expertise and bringing some of these U.S.-Ukrainian partnerships into the fold of the Defense Department.

They are very clear that they want the best technology for the DoD and the best technology is in Ukraine. And of course, these companies are they're not immune to the politics. Nobody is. But really, they're focused on the technology. And these Ukrainian companies, they are focused on finding new ways, new places to sell their drones, to get additional capital, additional revenue to grow.

I will say that one potential problem is that as the trust of the U.S. from the Ukrainian side grows,

with actions like the Trump administration stopping military aid and pausing intelligence sharing and the like, there could be some greater challenges in getting Ukrainian government approval for these Ukrainian drone companies to begin selling their technology and sharing the technology with U.S. counterparts. We'll have to wait and see how that plays out. Aside from politics...

What's standing in the way of Ukraine selling drones to the U.S.? The big thing is export controls. Ukraine does not allow its domestic drone makers to sell drones outside of the country. They want to keep all the drones for their fight against Russia. There have been some workarounds. Companies are setting up manufacturing facilities in other parts of Europe.

The companies are seeking exceptions, special permissions to sell a small number of drones to the U.S. And there are some avenues being carved to let Ukrainian drone makers start to expand. There are also huge lobbying efforts by these Ukrainian drone companies to try to get Kyiv to change its mind on this. That was WSJ reporter Heather Somerville.

And that's it for Tech News Briefing. Today's show was produced by Julie Chang with supervising producer Catherine Millsop and deputy editor Chris Zinsley. I'm Shara Tipkin for The Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.

With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast Business helps turn today's enterprises into engines of modern business. Powering the engine of modern business. Powering possibilities. Restrictions apply.